Eland to invest $190m in Nigerian asset

London Exchange-listed Eland Oil and Gas, said it plans to invest about $190million into developing its Oil Mining Lease, OML 40 asset in Nigeria, while hoping to increase crude production from the asset from current 3000 barrels per day, bpd, to 50,000bpd over the next three years.

Output projection is based on the belief that the oil block holds reserves of up to 500million barrels, the company said. It added that only about 50 million barrels or 10 percent of the proven reserves have so far been taken out of the block.

Speaking with journalists in Lagos last week about 6the company’s plans for the asset, Eland’s Chief Executive Officer, Mr. Leslie Blair, said the company hoped to re-stream production from the field by the first quarter of 2013.

He said, “We have raised $190million from the London Stock Exchange, LSE, and we are putting everything into the Nigerian asset. In terms of our plans for OML 40, we’ve presented our work programme, as you know, we are in a joint venture NPDC (Nigerian Petroleum Development Company), and they have agreed with us, and we intend to build the OML 40 to 50,000 barrels a day in a full year period.”

He revealed that production on the field will start up with the 3,000bpd it closed with some seven years ago, and later ramped up to 50,000bpd in a few years. He explained that the ambitious production target is based on the suspected high prospects of the oil-rich Niger Delta region.

In Blair’s assessment, “The Niger Delta is a very prospective area, but it’s just underdeveloped. Frankly, it has huge potential, and some people talk about the potential but most people don’t realize the potential it has, and I think that Nigeria needs the revenue and they need it right now.

“Again, the Niger Delta is capable of being developed relatively quickly if a number of new players are introduced into the market and there is an opportunity for new players to come in the Niger Delta because there are hundreds of fields that are yet to be developed.”

Local content development

The Eland boss promised to support Federal Government’s local content policy, saying that his company planned to use indigenous contractors for its projects.

“When I say we are fully aligned with the indigenisation policy, we also have to get the work done and done efficiently, and that means we have to work with the indigenous contractors to build up their own efficiency, so whatever we can do, whether its financial assistance we can give, if it’s the advance payment for the contractors because one of the issues is that we don’t have access to capital especially if you are a small company in the country.”

He also recalled that a similar policy had occurred in the United Kingdom, UK, a long time ago. “We went through this in the UK, because when oil first started in Scotland, all the oil companies were American, but the British Government said we are going to change this and we did change it. And to today, probably in Scotland, you will not see American companies because the oil in Scotland was fully indigenous.”